For-Profit Kaplan University Pays Executives a Quarter Billion Dollars, Courtesy of Students and Taxpayers

The for-profit college and university business is a $30-billion-dollar industry in the United States. According to investigative journalist Daniel Golden, in the last decade, the for-profit colleges and universities have tripled enrollment and recorded profits of $26 billion.(1)

For-profit colleges have been paying lavish and grotesquely huge compensation to executives, both former and current, using money from student loans and government grants for decades. For-profit college executive compensation is currently under scrutiny by Congress because nearly all revenues that constitute the exorbitant and scurrilous executive pay packages come from federal grants, such as Pell Grants and loans, and such as Stafford Loans under the Title IV program. These grants and loans are tax monies collected by the government; they are then turned into subsidies for the for-profit educational industry. Double-digit annual growth in revenues and excessive executive compensation coupled with deceptive marketing, high tuition, low graduation rates and high loan default rates have driven a climate and culture of student exploitation, misappropriation of public monies and political corruption.

The average three-year default rate has been estimated at 22.4 percent for for-profit colleges, 6.7 percent at private nonprofit colleges and 9.7 percent at public colleges.(2) ProPublica, an online journalistic source, reported that the Department of Education (DOE) indicated that over 40 percent of the money lent to students at for-profit institutions would be in default at some point over the life of the loans. The DOE did not say how much of this money would ultimately be lost to the Treasury.(3) Borrowers in default can and often do end up repaying what is owed, but students themselves will tell you this is harder and harder to do as the economy gets worse and worse and job opportunities dry up faster.

The for-profit educational complex commodifies education as one would any product. They repackage predatory business practices, similar to those found in the subprime mortgage fiasco, and sell the educational product to students in what they claim is "a service" to "the low income constituencies" and thus as a benefit to society as a whole. Vulnerable populations, such as veterans, minorities and single working mothers with children, are targeted and lured into the for-profits with promises of a bright, rosy future containing decent jobs, higher pay, the ability to buy more "stuff" and a better life through government-financed and subsidized education provided by for-profit providers. Nothing could be further from the truth.

Targeting the Most Vulnerable in Society: Disposable Youth, Surplus Populations of Unemployed, Veterans From Illegal Wars and the Homeless

The General Accounting Office (GAO) has investigated the for-profit educational industry's marketing tactics on several occasions. They pose as students and investigate how these for-profit predatory colleges actually recruit students. They have found that aggressive military-style recruitment is the norm.(4) Holly Petraeus, CIA Director David Petraeus' wife and an outspoken advocate for military families, told a Senate panel back in November 3, 2011, that for-profit colleges were actively targeting military personnel and their families - she testified that they were even marketing private loans with inflated interest rates.(5) For-profits have even been caught attempting to recruit the homeless and their literature and advertisements can be found at welfare offices, unemployment offices and even at public housing sites where college recruiters often can be found driving through poor urban sectors of major cities in slow moving vans looking for students as though they were low hanging fruit.(6) They do this, they say, to help the minority and economically disadvantaged. In reality, they are leading these poor youth, who face little in the way of civilian life, to economic and social slaughter.

The parallel between for profit colleges and subprime mortgage lenders is not coincidental. To begin with, for years, regulators and the Department of Justice and the DOE have been warned about "an epidemic" of for-profit educational fraud, misrepresentation and illegal activities. Oversight agencies and government looked the other way or actively worked to deregulate in favor of the predatory universities and colleges.

Secondly, both have been driven by Wall Street financial interests seeking new sources of investment for profit maximization. Alex Molnar, a research professor at the University of Colorado Boulder School of Education, who has studied the for-profit educational sector for many years, spoke of Wall Street's increasing financialization of the $500-billion-dollar public educational sector:

"What we're talking about here is the financialization of public education. These folks are fundamentally trying to do to public education what the banks did with home mortgages."[7]

Another analogue with the subprime mortgage fraud can be found in comparing the regulating or accrediting agencies that give their blessing to the for-profit colleges to do business as educational entities with regulating agencies like Warren Buffet's, Moodys or Standard and Poor. As we know now, the rating agencies that were supposed to oversee and rate the packaged toxic bonds Wall Street sold and issued so they could assure investors of their safety, have themselves had conflicts of interest. They were being paid in myriad ways by Wall Street financial capitalists to dupe investors (pension funds, entire countries, charities and individuals to name a few) into thinking that that the "toxic asset" bonds that Wall Street was selling merited the highest safety rating of AAA. The same is true with the accrediting agencies, many of whom work diligently in showering legitimacy to what would otherwise be criminal enterprises. It's all legal and it is all part and parcel of neoliberalism, the late stage of capitalism that we find ourselves in where 40 percent of the US economy is financialized.

Kaplan University: Blood Bank for The Washington Post

An examination of one of The Washington Post's subsidiaries, Kaplan University, provides a peek into the business of for-profit predatory colleges.

As this story will report, influenced by corporate money, the job of the coin-operated politicians is to facilitate the transfer of tens of billions of dollars of public money, in the form of taxpayer-subsidized government-guaranteed loans and grants, to private, yet publicly traded, for-profit corporations which produce little or no value, as demonstrated by low graduation rates at these institutions. Under neoliberalism, the political class also works to pass favorable regulations for the industry and stave off onerous ones. The government is virtually turned into a corporate board room, to do the corporation's business. In this way, they use the government to pass favorable public policy and to collect revenues to be turned over to the for-profit predatory colleges and universities and to assure that the legal and regulatory climate and landscape is favorable to the industry. The politicians are paid to represent the interests of the corporate for-profit educational industry and they represent their constituency quite nicely.

Lavish Compensation

According to Washington Post Company (WaPo) 10-K annual reports, WaPo paid Kaplan Incorporated executives $289 million dollars related to stock option payouts between 2003 and 2008.(8) In 2003, a $119 million executive payout was double Kaplan Incorporated's entire operating income of $58 million. Such compensation is outlandish, even by Wall Street standards. In light of the high student default rates, rising student loan debts and low student graduation rates, the compensation is grotesquely unconscionable.(9) Student loan debt is now more than one trillion dollars, surpassing the total amount owed in credit card debt.

On November 19, 2008, Kaplan Incorporated's 29-year-old CEO, Jonathan Grayer, resigned from the for-profit university division. In return, WaPo gave him a severance package worth more than $76 million.(10)

The golden parachute included payments of $10 million paid in November of 2009 and another $20 million shelled out in November of 2011. The $20 million due Grayer in November 2011 was greater than Kaplan's entire 2011 third quarter operating income of $18 million.(11) The majority of the sumptuous compensation was paid for by taxpayers through Pell Grants and Stafford Loans the company gets through students. Kaplan, like all for-profit predatory universities and colleges, socializes the cost of doing business and then privatizes the private profits through outlandish compensation packages, stock sales, bonuses and the like. In this way. they also parrot the subprime mortgage industry. When the student defaults, Kaplan doesn't care; it has already received the tax monies.

Ironically, at the same time WaPo was paying out over $76 million to Grayer in bountiful compensation deals, Washington Post newspaper editor Marcus Brauchli was busy shuttering news bureau offices, laying off newsroom staff and eliminating whole sections of the Post's Sunday newspaper in an attempt to save money. This is because the newspaper business is no longer profitable except as a propaganda organ for Donald Graham, the CEO. The real profits lie in the for-profit educational industry, technology, student testing, and other media. Graham knows this.

On June 2, 2011, the DOE issued new regulations governing for-profit colleges, regulations which Mr. Graham personally had aggressively lobbied to weaken. Mr. Graham, in fact, was a leading part of a fierce battle waged for more than a year now against greater US DOE regulation of the $30-billion-dollar for-profit educational industry. Graham and his for-profit allies spent more than $4.5 million on lobbying during the first three months of 2011 alone.(12) This put the industry on pace to spend more than twice what it spent in 2010 on pitched battles with the DOE and their feeble attempt to regulate the industry. The investment evidently paid off, for The Washington Post stock was saved from outright decimation and the regulations were severely weakened.

Timing is everything. On June 6, just two business days after the issuance of the new and weakened regulations, the Graham family began cashing in more than $12 million in stock.(13)(14) This was part of over $70 million in stock cashed in by the Graham family between 2008 and 2011.(13)*

Paid for by Students and Taxpayers

As noted above, the exorbitant for-profit college executive compensation has been paid for using revenue derived from Pell Grants, GI benefits, veterans benefits and Stafford government-guaranteed student loans. The cost to taxpayers has been substantial. Kaplan Higher Education obtained $1.46 billion from Title IV government programs in 2010 alone. This included $1.01 billion from federally guaranteed student loans and $450 million from Pell grants. Kaplan's estimated cost to taxpayers for 2010 only is $650 million.(15) This number is based upon the cost of Pell Grants and a conservative estimate that 20 percent only of the loan money taken by students will not be repaid.

The cost to students has also been substantial. Tuition at Kaplan is about double the cost of tuition at public universities and colleges.(16) The estimated costs for completion of a degree at Kaplan University can vary, depending on the degree. At the Kaplan Career Institute in Pittsburgh, to take one example, the cost for the university's most popular program, criminal justice, (excluding room and board, which is not available on the campus), is roughly $31,000, including books and supplies.(17)This is for an 18-month program and curriculum only; costs can go as high as $41,000 or more for a Bachelor of Science, and this is just for the cost of tuition.(18) As we will see, "fees" are another matter.

To get a better idea of the costs incurred for the product or "degrees" that Kaplan sells, we will use financial data from the Kaplan South Portland campus in Oregon - for it is telling and the data is current.

To begin with, Kaplan offers three degree programs or rather, three degree "products" at their South Portland campus as well as nationally. There is the Associate of Applied Science degree, the Advanced Start Bachelor of Science degree and the actual Bachelor of Science degree. By offering three "educational products," Kaplan creates an educational menu for profit extraction purposes. Tuition is charged on a course-by-course basis at the rate of $230 per quarter credit hour.

Below is a chart that indicates the tuition cost of a "degree" in the three mentioned areas at the Kaplan South Portland School:

But this is simply the cost for tuition. Kaplan, like most for-profit predatory colleges and universities, also charges "fees" and these fees can be as onerous and as hideous as the tuition itself. Think of buying a product off the television and having to pay that pesky and costly "shipping and handling fee."

At the South Portland Kaplan campus, there is a $20.00 application fee, a $20.00 late registration fee. Then, there is the $210 technology fee and, for some programs, the $75.00 background investigation fee. If a student is enrolled in the Business Administration AAS program - specifically those enrolled in travel and hospitality career focus areas - there is a certification examination known in Kaplan parlance as the "Travel Agent Proficiency (TAP) Examination" and of course there is a fee there as well, $100. For those lucky enough to graduate, (and they are few and far between, as the data indicates. Typically, many students drop out before graduating or can't find the types of jobs that will allow them to repay their loans, leaving them with staggering nondischargeable debt) there is a graduation fee of $135.

But the fees don't stop there. According to the South Portland Kaplan web site:

"In certain circumstances, the University may be asked to certify a student's status. In such cases, a certification fee may be assessed. This does not apply to insurance certifications for currently enrolled students."

In the event this certification is necessary, the student can expect to tack on another $100 fee.

Finally, there are additional "course fees" for specific courses at the Kaplan South Portland Campus. At the Kaplan South Portland campus, the following courses and added fees attendant to them are listed. These are referred to by Kaplan as "quarter credit programs":

When taken together, the cost for fees can be astronomical. Add these costs to the price of tuition - which Kaplan conveniently fails to directly disclose to students - and the cost for their educational products soars to astronomical heights.

In 2010, Kaplan Higher Education had an operating income of $396 million on reported revenues of $1.8 billion, revealing a profit margin of 22 percent.(21) Marketing and recruiting costs at for-profit colleges like Kaplan have been estimated at 25-30 percent of revenues. Therefore, about 50 percent of the tuition students pay goes toward marketing and corporate profits. Incredibly, students are paying approximately $7,500 a year to subsidize these two noneducational-related costs. But it gets worse: in 2008, for-profits spent a mere 18 percent of revenues on instructional costs. So, where is the rest of the money? Overhead, bonuses, real estate and who knows what else.(22)

The 100 percent tuition mark-up to cover marketing costs, noninstructional costs and profits is likely a contributory factor to loan defaults. While for-profit students comprise 12 percent of all college students nationally, they account for 15 percent of all student loan defaults.(23) According to the DOE, Kaplan University's three-year cohort default rate is 30 percent for student loans that began repayment in 2008.(24) What this means is that three years after the loans which began repayment in 2008, 30 percent are now in default.(25)(26) Kaplan University's three-year default rate is three time the rate for public colleges and four times the rate for private nonprofit colleges.(27)

The inflated cost of tuition, driven by greed and the unquenchable thirst for profits, is most likely an important contributory factor to the low graduation rates, since Kaplan freely admits most of its students are low-income adults. Kaplan has acknowledged that only about one-third of its student body complete degree programs and graduate. For higher risk students, this number drops to 24 percent. And in collegiate "dropout factories" in Virginia, such as the University of Phoenix in Northern Virginia, graduation rates are 6 percent. At Strayer University, another for-profit predatory college in District of Columbia, the graduation rate is 15 percent.(28) Once again, parroting the subprime mortgage fraud and consequent four million foreclosures, such results could only be considered successful in the growing "subprime" model of education that is now the darling of Wall Street and is busy foreclosing on students' lives.

While Kaplan and other for-profit schools claim to serve a disadvantaged largely minority population, does anyone really believe that saddling low-income students with $40,000 or more in loan debt is really helping them? Some seem to, like the Rev. Jesse Jackson.(29) He is either delusional or getting paid by the for-profit industry. Much closer to the truth, for-profit colleges are literally taking advantage of low-income minority individuals, financially mugging them in broad daylight, right under the noses of the political elites who enshrine and legalize the whole sordid enterprise in a ruthless and callous effort to obtain their Pell Grants and government-guaranteed loans, which are the lucrative sources of revenue and grotesque profits for the executives and shareholders.

Along with subprime mortgages, payday loans, check cashing joints, car title company loans, furniture rental chains and other financial parasites, for-profit predatory colleges have taken their place as predators on the poor - inflicting misery and hardship on the homeless, single mothers and returning war veterans; all this as Wall Street seeks new sources of profit through the financialization of education.

While executives are swaddled in luxury items and cash and awash in fantastic compensation packages, the low-income, working-class students they mendaciously claim to serve are saddled with tens of thousands of dollars of arguably usurious nondischargeable debt. Current interest rates to students for the direct Stafford loans are broken down for direct Subsidized loans and direct unsubsidized loans. For undergraduate students, if the first disbursement of the direct subsidized loan is between July 1, 2011, and June 30, 2012, the interest rate on the loan is fixed at 3.4 percent. Graduate students are not so lucky. Their interest rate or cost for the loan is a whopping 6.8 percent. This is also true for the cost of borrowing for a direct unsubsidized loan.(graduate or undergraduate) Even though these amounts are fixed, the cost is exorbitant. The cost to borrow funds for a 30-year mortgage on December 27, 2011, was as low as 2.8 percent.(30) Many students are paying interest of over 7 percent on student loans they previously took out. This is debt peonage and a significant number of gray-haired working people in their 40s are still paying off student loans.

The majority of students never graduate from for-profit universities and colleges. Instead, they are left with no education, no jobs and few prospects - for when a student defaults on their student loans, they face wage garnishment, and if they still owe when they reach the age of Social Security eligibility (whatever age this will be in the future), even their Social Security checks are garnished for years or in perpetuity. Student borrowers who default can also face a lifetime of consequences, including an inability to borrow for a car or a house, wage garnishment, seizure of tax refunds, or even, in an era when employers increasingly check credit reports, difficulty getting a job or renting an apartment. Inevitably, they are left with broken dreams, devastated credit and forced to experience a form of "financial or social death" as they become financially and socially disposable.

Facilitated by the Government

Under new regulations which take effect in 2014, the DOE will now allow colleges to have a loan default rate of up to 40 percent in any one given year, with an allowable default rate of 30 percent over three years.(31) This is an increase over the 35 percent prior to the new regulations. The government's new allowance of a 30-40 percent default rate represents the theft of taxpayer money by Wall Street, with the costs borne by students and taxpayers. The new DOE regulations that increase the allowable default rate simply give the green light to for-profit colleges to keep shackling large numbers of low-income students with nondischargeable debt. This is an example of just how neoliberal government policies work to assure increasing institutional privatization through regulation and deregulation - in this case for-profit predatory colleges - while ensuring the enrichment of elite financial players on Wall Street like hedge fund operators, stock brokers, investment counselors, and the like. It is a government for the corporations, of the corporations and by the corporations.

Anthony Miller, now deputy secretary of the DOE, is a perfect example of how neoliberal governmental policies encourage the revolving door between Wall Street lobbyists who pay bribes to politicians and the government to assure a seamless relationship between big corporate government and Wall Street financial interests. Mr. Miller.(32) will be one of the featured speakers at the Capital Round Table's $1,400-a-plate conference entitled: "Private Equity Investing In For-Profit Education Companies" scheduled for January 12, 2012. Prior to his appointment to the DOE, Miller was an operating partner with the private equity investment firm Silver Lake Partners.(33) You can go to the site and take a look at the other participating sponsors of the event - they are all representatives of Wall Street and the financial sector.

The roster of those who have supported and defended for-profit colleges - ignoring high student debt, low graduation rates and high levels of loan defaults - includes Speaker of the House John Boehner, North Carolina Rep. Virginia Foxx, Nancy Pelosi, Diane Feinstein, Jesse Jackson and presidential candidates Michele Bachman and Ron Paul, to name a few.(34) Pelosi is one of the more despicable of the for-profit predatory educational industry defenders and there is no mystery. Some of the biggest recipients of the $32 billion in federal student loans and Pell Grants each year paid to for-profits are in her district - including major Democratic donor John Sperling, founder of the online University of Phoenix, the nation's largest for-profit predatory college, where the extraction of government funds for private profit is one of the most larcenous. Like any paid-for political trollop, Pelosi expresses her concern for low-income minority students' educational opportunities while shoveling for-profit educational industry money into her war chest. The fact is that, without the Democrats, the Republicans probably could never have given the for-profit industry the legitimacy and favorable laws the industry wanted. Many Democrats are vigorous defenders of the for-profit college scam for they know that Wall Street is where the money is. Richard Blum, Diane Feinstein's husband, sits on the board of the University of Phoenix. So does Senator Burton of California.

The New York Times reported that the Washington Post Company spent $1.6 million lobbying Congress with respect to the proposed gainful employment regulations affecting for-profit colleges.(35) The Democrats are the worst abusers. Take Anita Dunn, a close friend of President Obama and his former White House communications director, who worked with Kaplan University, one of the embattled school networks. Jamie Rubin, a major fund-raising bundler for the president's re-election campaign, met with administration officials about ATI, a college network based in Dallas, in which Mr. Rubin's private-equity firm has a stake.

A who's who of Democratic lobbyists - including Lanny Davis, Richard A. Gephardt, the former House majority leader; John Breaux, the former Louisiana senator; and Tony Podesta, whose brother, John, ran Mr. Obama's transition team - were hired to buttonhole officials.(36) All the usual suspects and beltway insiders worked assiduously, for money of course, to assure years more of student exploitation and oppression under the corporate thieves.

While news sources reported that Washington Post CEO Graham met privately with various members of Congress in an effort to stave off or at the very least water down DOE regulations of the for-profit predatory college industry, he has refused to disclose with whom he met.(37) Rather than fostering full disclosure, transparency or reporting on corporate interests which corrupt the political process - the job of the media - The Washington Post and its chief CEO have actually engaged in corrupt political influence with the public scarcely aware.

The Pitchmen

CEOs of for-profit colleges and universities repackage what is essentially a financial predatory business plan that negatively impacts citizens and the government and then perfidiously turns around and sells their educational products to disenfranchised students as a "social benefit." Graham has been the most public of the CEO pitchmen, promoting himself as a "champion of poor students," while his actual actions tell a contrary story.

On January 14, 2011, Donald Graham published an editorial in The Wall Street Journal entitled: "Avoiding Disaster for low-income students."(38) Just two months later, WaPo threatened to raise tuition rates on the low-income students - the same students that Graham had claimed to advocate for in his Wall Street editorial - if Congress did not modify a DOE rule (the gainful employment rule), which Kaplan was at risk of violating.(39)

Graham's motivation for getting into the lucrative for-profit education business has nothing to do with altruism and everything to do with greed and profit extraction from the federal government and taxpayer largesse. A November 7, 2003, Wall Street Journal article, entitled: "Kaplan Transforms Into Big Operator Of Trade Schools" The Wall Street Journal reported:

"He [Graham] says one reason Washington Post has focused on educational acquisitions is that television stations and other media properties it might otherwise seek to acquire have grown too expensive. "Given prices in media, education has been the bulk of where we have had to grow and I love the way Kaplan grows,' he says."[40]

The 2010 Washington Post 10-K annual report filed with the Security and Exchange Commission (SEC), disclosed that "Compliance With Recently Adopted Regulations Regarding Incentive Compensation May Make It Difficult for Kaplan to Attract Students and Retain Qualified Personnel."(41) The Washington Post's SEC disclosure tends to undermine the claims by the CEO pitchmen, like Graham, that their online for-profit colleges meet real social and human needs.

The Kaplan CHI surgical tech case revealed Graham's lack of regard, even contempt, for the disadvantaged students Kaplan claims to serve.(42) In 2007, a whistleblower lawsuit (false claims suit) was filed with the DOE by David Goodstein, claiming students at CHI Institute in Broomall, Pennsylvania, school were being enrolled in the surgical technician program offered at the school even though Kaplan knew there was a lack of necessary clinical externship sites for the students to complete the program. After completing the classroom portion of the program, some students were either dropped from the program or sent home on leave, never to be called back.(43)

Earnest, hard-working students were duped by Kaplan and had their dreams of a career stolen, and they were left with defaulted loans and debt of up to $14,000 a piece. WaPo settled the matter with the Department of Justice in 2011 for $1.6 million.(44) This included $500,000 to pay off the loans of 43 students who were in the program. Much like the subprime loan scandal, despite evidence of misconduct by Kaplan, no criminal charges were ever brought against the company or its officers.(45)

Graham waited for over four years to finally pay off the outstanding loans of Kaplan students victimized in the CHI matter. At the same time Graham was delaying paying off the CHI students' loans and dragging his feet in an attempt to avoid responsibility and eventual settlement for wrongful acts, he and his family were busy cashing in over $70 million in stock, and the Post Company was paying out $76 million to ex-Kaplan CEO Jonathan Grayer. Of course, Graham has made and will make no apologies to the students, nor did he make any effort to refund money to students to compensate them for their lost time, pain and suffering and untold stress and anxiety.

"I attend Kaplan University as well. My major is medical assisting. The school is having a hard time finding me a clinical site. Therefore, I will have to take next semester off until I am placed at a site."[46]

Sadly, it appears the CHI fraud is not an isolated incident. With the DOE caving into the paid lobbying efforts of the silk-back thugs who represent the industry and the outright strong-arming of politicians and the DOE by the multibillion dollar for-profit educational industry and their public relations firms, it is doubtful that we can expect any action or remedies from the Department of Justice, the DOE, or any other institutions purportedly designed to work to hold Wall Street perpetrators accountable. This is how neoliberalism and late-stage capitalism now function. As to the smarmy politicians who say they represent the interests of citizens, they don't. In fact, they can be found in the corridors of power with their hands out and palms up, eager to do the bidding of what is undoubtedly one of the most rapacious and atrocious for-profit industries in the United States.(46) In this way, they are co-conspirators in what will be one of the biggest financial bubbles to soon burst as students find they have no futures other than debt and - for the minority who do graduate - virtually worthless for-profit degrees.

(11) United States Securities And Exchange Commission, Washington, DC, 20549, WaPo form 10-Q, Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the quarterly period ended October 2, 2011, or, Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, Commission File Number 1-6714. pp. 21).

(21) United States Securities And Exchange Commission, Washington, DC. 20549, WaPo, form 10-K. annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. for the fiscal year ended january 2, 2011. Commission file number 1-6714, pp. 47.

(30) The current interest rates for the irect Stafford loans are broken down for direct Subsidized loans and direct unsubsidized loans. For undergraduate students, if the first disbursement of the direct subsidized loan is between July 1, 2011, and June 30, 2012, the interest rate on the loan is fixed at 3.4 percent. Graduate students are not so lucky. Their interest rate or cost for the loan is a whopping 6.8 percent. This is also true for the cost of borrowing for a direct unsubsidized loan (graduate or undergraduate). Even though these amounts are fixed, the cost is exorbitant. The cost to borrow funds for a 30-year mortgage on December 27, 2011, was as low as 3.94 percent.

(31) Gast, S., Glickman, J. (September 12, 2011) "Default Rates Rise for Federal Student Loans Department continues work to protect taxpayer funds and help students manage their debt," the US DOE. The New York Times.

(38) Graham, D., (January 14, 2011) "Avoiding Disaster for Low-Income Students For-profits cost the taxpayers considerably less per student than any other form of higher-education."

(39) United States Securities And Exchange Commission, Washington, DC, 20549, WaPo. form 10-K. annual report pursuant to section 13 or 15(d) of The Securities Exchange Act of 1934, for the fiscal year ended January 2, 2011, Commission file number 1-6714.

Weil, D., (December 16, 2011) "U. of Phoenix founding family sells $127 million in stock while less than 7 percent of Phoenix students graduate in DC metro area," The Daily Censored.

*Kaplan's Donald Graham and his family are not alone in dumping industry stock. Another stunning example quite recently in 2011 when the Sperling family (founders of University of Phoenix and huge campaign contributors to Nancy Pelosi) cashed in $127 million in stock while the University of Phoenix was ranked as having the lowest graduation rate (6-7 percent) of any college in the Washington, DC, metro area.

Danny Weil is a writer for Project Censored and Daily Censored. He received the Project Censored "Most Censored" News Stories of 2009-10 award for his article: "Neoliberalism, Charter Schools and the Chicago Model / Obama and Duncan's Education Policy: Like Bush's, Only Worse," published by Counterpunch, August 24, 2009. Dr. Weil has published more than seven books on education in the past 20 years. You can also read much more about the for-profit, predatory colleges in his writings found at Counterpunch.com, Dailycensored.com, dissidentvoice.com and Project Censored.com where he has covered the issue of the privatization of education for years. He can be reached at [email protected] His new book, an encyclopedia on charter schools, entitled: "Charter School Movement: History, Politics, Policies, Economics and Effectiveness," 641 pages, was published in August of 2009 by Grey House Publishing, New York, and provides a scathing look at the privatization of education through charter schools.

For-Profit Kaplan University Pays Executives a Quarter Billion Dollars, Courtesy of Students and Taxpayers

The for-profit college and university business is a $30-billion-dollar industry in the United States. According to investigative journalist Daniel Golden, in the last decade, the for-profit colleges and universities have tripled enrollment and recorded profits of $26 billion.(1)

For-profit colleges have been paying lavish and grotesquely huge compensation to executives, both former and current, using money from student loans and government grants for decades. For-profit college executive compensation is currently under scrutiny by Congress because nearly all revenues that constitute the exorbitant and scurrilous executive pay packages come from federal grants, such as Pell Grants and loans, and such as Stafford Loans under the Title IV program. These grants and loans are tax monies collected by the government; they are then turned into subsidies for the for-profit educational industry. Double-digit annual growth in revenues and excessive executive compensation coupled with deceptive marketing, high tuition, low graduation rates and high loan default rates have driven a climate and culture of student exploitation, misappropriation of public monies and political corruption.

The average three-year default rate has been estimated at 22.4 percent for for-profit colleges, 6.7 percent at private nonprofit colleges and 9.7 percent at public colleges.(2) ProPublica, an online journalistic source, reported that the Department of Education (DOE) indicated that over 40 percent of the money lent to students at for-profit institutions would be in default at some point over the life of the loans. The DOE did not say how much of this money would ultimately be lost to the Treasury.(3) Borrowers in default can and often do end up repaying what is owed, but students themselves will tell you this is harder and harder to do as the economy gets worse and worse and job opportunities dry up faster.

The for-profit educational complex commodifies education as one would any product. They repackage predatory business practices, similar to those found in the subprime mortgage fiasco, and sell the educational product to students in what they claim is "a service" to "the low income constituencies" and thus as a benefit to society as a whole. Vulnerable populations, such as veterans, minorities and single working mothers with children, are targeted and lured into the for-profits with promises of a bright, rosy future containing decent jobs, higher pay, the ability to buy more "stuff" and a better life through government-financed and subsidized education provided by for-profit providers. Nothing could be further from the truth.

Targeting the Most Vulnerable in Society: Disposable Youth, Surplus Populations of Unemployed, Veterans From Illegal Wars and the Homeless

The General Accounting Office (GAO) has investigated the for-profit educational industry's marketing tactics on several occasions. They pose as students and investigate how these for-profit predatory colleges actually recruit students. They have found that aggressive military-style recruitment is the norm.(4) Holly Petraeus, CIA Director David Petraeus' wife and an outspoken advocate for military families, told a Senate panel back in November 3, 2011, that for-profit colleges were actively targeting military personnel and their families - she testified that they were even marketing private loans with inflated interest rates.(5) For-profits have even been caught attempting to recruit the homeless and their literature and advertisements can be found at welfare offices, unemployment offices and even at public housing sites where college recruiters often can be found driving through poor urban sectors of major cities in slow moving vans looking for students as though they were low hanging fruit.(6) They do this, they say, to help the minority and economically disadvantaged. In reality, they are leading these poor youth, who face little in the way of civilian life, to economic and social slaughter.

The parallel between for profit colleges and subprime mortgage lenders is not coincidental. To begin with, for years, regulators and the Department of Justice and the DOE have been warned about "an epidemic" of for-profit educational fraud, misrepresentation and illegal activities. Oversight agencies and government looked the other way or actively worked to deregulate in favor of the predatory universities and colleges.

Secondly, both have been driven by Wall Street financial interests seeking new sources of investment for profit maximization. Alex Molnar, a research professor at the University of Colorado Boulder School of Education, who has studied the for-profit educational sector for many years, spoke of Wall Street's increasing financialization of the $500-billion-dollar public educational sector:

"What we're talking about here is the financialization of public education. These folks are fundamentally trying to do to public education what the banks did with home mortgages."[7]

Another analogue with the subprime mortgage fraud can be found in comparing the regulating or accrediting agencies that give their blessing to the for-profit colleges to do business as educational entities with regulating agencies like Warren Buffet's, Moodys or Standard and Poor. As we know now, the rating agencies that were supposed to oversee and rate the packaged toxic bonds Wall Street sold and issued so they could assure investors of their safety, have themselves had conflicts of interest. They were being paid in myriad ways by Wall Street financial capitalists to dupe investors (pension funds, entire countries, charities and individuals to name a few) into thinking that that the "toxic asset" bonds that Wall Street was selling merited the highest safety rating of AAA. The same is true with the accrediting agencies, many of whom work diligently in showering legitimacy to what would otherwise be criminal enterprises. It's all legal and it is all part and parcel of neoliberalism, the late stage of capitalism that we find ourselves in where 40 percent of the US economy is financialized.

Kaplan University: Blood Bank for The Washington Post

An examination of one of The Washington Post's subsidiaries, Kaplan University, provides a peek into the business of for-profit predatory colleges.

As this story will report, influenced by corporate money, the job of the coin-operated politicians is to facilitate the transfer of tens of billions of dollars of public money, in the form of taxpayer-subsidized government-guaranteed loans and grants, to private, yet publicly traded, for-profit corporations which produce little or no value, as demonstrated by low graduation rates at these institutions. Under neoliberalism, the political class also works to pass favorable regulations for the industry and stave off onerous ones. The government is virtually turned into a corporate board room, to do the corporation's business. In this way, they use the government to pass favorable public policy and to collect revenues to be turned over to the for-profit predatory colleges and universities and to assure that the legal and regulatory climate and landscape is favorable to the industry. The politicians are paid to represent the interests of the corporate for-profit educational industry and they represent their constituency quite nicely.

Lavish Compensation

According to Washington Post Company (WaPo) 10-K annual reports, WaPo paid Kaplan Incorporated executives $289 million dollars related to stock option payouts between 2003 and 2008.(8) In 2003, a $119 million executive payout was double Kaplan Incorporated's entire operating income of $58 million. Such compensation is outlandish, even by Wall Street standards. In light of the high student default rates, rising student loan debts and low student graduation rates, the compensation is grotesquely unconscionable.(9) Student loan debt is now more than one trillion dollars, surpassing the total amount owed in credit card debt.

On November 19, 2008, Kaplan Incorporated's 29-year-old CEO, Jonathan Grayer, resigned from the for-profit university division. In return, WaPo gave him a severance package worth more than $76 million.(10)

The golden parachute included payments of $10 million paid in November of 2009 and another $20 million shelled out in November of 2011. The $20 million due Grayer in November 2011 was greater than Kaplan's entire 2011 third quarter operating income of $18 million.(11) The majority of the sumptuous compensation was paid for by taxpayers through Pell Grants and Stafford Loans the company gets through students. Kaplan, like all for-profit predatory universities and colleges, socializes the cost of doing business and then privatizes the private profits through outlandish compensation packages, stock sales, bonuses and the like. In this way. they also parrot the subprime mortgage industry. When the student defaults, Kaplan doesn't care; it has already received the tax monies.

Ironically, at the same time WaPo was paying out over $76 million to Grayer in bountiful compensation deals, Washington Post newspaper editor Marcus Brauchli was busy shuttering news bureau offices, laying off newsroom staff and eliminating whole sections of the Post's Sunday newspaper in an attempt to save money. This is because the newspaper business is no longer profitable except as a propaganda organ for Donald Graham, the CEO. The real profits lie in the for-profit educational industry, technology, student testing, and other media. Graham knows this.

On June 2, 2011, the DOE issued new regulations governing for-profit colleges, regulations which Mr. Graham personally had aggressively lobbied to weaken. Mr. Graham, in fact, was a leading part of a fierce battle waged for more than a year now against greater US DOE regulation of the $30-billion-dollar for-profit educational industry. Graham and his for-profit allies spent more than $4.5 million on lobbying during the first three months of 2011 alone.(12) This put the industry on pace to spend more than twice what it spent in 2010 on pitched battles with the DOE and their feeble attempt to regulate the industry. The investment evidently paid off, for The Washington Post stock was saved from outright decimation and the regulations were severely weakened.

Timing is everything. On June 6, just two business days after the issuance of the new and weakened regulations, the Graham family began cashing in more than $12 million in stock.(13)(14) This was part of over $70 million in stock cashed in by the Graham family between 2008 and 2011.(13)*

Paid for by Students and Taxpayers

As noted above, the exorbitant for-profit college executive compensation has been paid for using revenue derived from Pell Grants, GI benefits, veterans benefits and Stafford government-guaranteed student loans. The cost to taxpayers has been substantial. Kaplan Higher Education obtained $1.46 billion from Title IV government programs in 2010 alone. This included $1.01 billion from federally guaranteed student loans and $450 million from Pell grants. Kaplan's estimated cost to taxpayers for 2010 only is $650 million.(15) This number is based upon the cost of Pell Grants and a conservative estimate that 20 percent only of the loan money taken by students will not be repaid.

The cost to students has also been substantial. Tuition at Kaplan is about double the cost of tuition at public universities and colleges.(16) The estimated costs for completion of a degree at Kaplan University can vary, depending on the degree. At the Kaplan Career Institute in Pittsburgh, to take one example, the cost for the university's most popular program, criminal justice, (excluding room and board, which is not available on the campus), is roughly $31,000, including books and supplies.(17)This is for an 18-month program and curriculum only; costs can go as high as $41,000 or more for a Bachelor of Science, and this is just for the cost of tuition.(18) As we will see, "fees" are another matter.

To get a better idea of the costs incurred for the product or "degrees" that Kaplan sells, we will use financial data from the Kaplan South Portland campus in Oregon - for it is telling and the data is current.

To begin with, Kaplan offers three degree programs or rather, three degree "products" at their South Portland campus as well as nationally. There is the Associate of Applied Science degree, the Advanced Start Bachelor of Science degree and the actual Bachelor of Science degree. By offering three "educational products," Kaplan creates an educational menu for profit extraction purposes. Tuition is charged on a course-by-course basis at the rate of $230 per quarter credit hour.

Below is a chart that indicates the tuition cost of a "degree" in the three mentioned areas at the Kaplan South Portland School:

But this is simply the cost for tuition. Kaplan, like most for-profit predatory colleges and universities, also charges "fees" and these fees can be as onerous and as hideous as the tuition itself. Think of buying a product off the television and having to pay that pesky and costly "shipping and handling fee."

At the South Portland Kaplan campus, there is a $20.00 application fee, a $20.00 late registration fee. Then, there is the $210 technology fee and, for some programs, the $75.00 background investigation fee. If a student is enrolled in the Business Administration AAS program - specifically those enrolled in travel and hospitality career focus areas - there is a certification examination known in Kaplan parlance as the "Travel Agent Proficiency (TAP) Examination" and of course there is a fee there as well, $100. For those lucky enough to graduate, (and they are few and far between, as the data indicates. Typically, many students drop out before graduating or can't find the types of jobs that will allow them to repay their loans, leaving them with staggering nondischargeable debt) there is a graduation fee of $135.

But the fees don't stop there. According to the South Portland Kaplan web site:

"In certain circumstances, the University may be asked to certify a student's status. In such cases, a certification fee may be assessed. This does not apply to insurance certifications for currently enrolled students."

In the event this certification is necessary, the student can expect to tack on another $100 fee.

Finally, there are additional "course fees" for specific courses at the Kaplan South Portland Campus. At the Kaplan South Portland campus, the following courses and added fees attendant to them are listed. These are referred to by Kaplan as "quarter credit programs":

When taken together, the cost for fees can be astronomical. Add these costs to the price of tuition - which Kaplan conveniently fails to directly disclose to students - and the cost for their educational products soars to astronomical heights.

In 2010, Kaplan Higher Education had an operating income of $396 million on reported revenues of $1.8 billion, revealing a profit margin of 22 percent.(21) Marketing and recruiting costs at for-profit colleges like Kaplan have been estimated at 25-30 percent of revenues. Therefore, about 50 percent of the tuition students pay goes toward marketing and corporate profits. Incredibly, students are paying approximately $7,500 a year to subsidize these two noneducational-related costs. But it gets worse: in 2008, for-profits spent a mere 18 percent of revenues on instructional costs. So, where is the rest of the money? Overhead, bonuses, real estate and who knows what else.(22)

The 100 percent tuition mark-up to cover marketing costs, noninstructional costs and profits is likely a contributory factor to loan defaults. While for-profit students comprise 12 percent of all college students nationally, they account for 15 percent of all student loan defaults.(23) According to the DOE, Kaplan University's three-year cohort default rate is 30 percent for student loans that began repayment in 2008.(24) What this means is that three years after the loans which began repayment in 2008, 30 percent are now in default.(25)(26) Kaplan University's three-year default rate is three time the rate for public colleges and four times the rate for private nonprofit colleges.(27)

The inflated cost of tuition, driven by greed and the unquenchable thirst for profits, is most likely an important contributory factor to the low graduation rates, since Kaplan freely admits most of its students are low-income adults. Kaplan has acknowledged that only about one-third of its student body complete degree programs and graduate. For higher risk students, this number drops to 24 percent. And in collegiate "dropout factories" in Virginia, such as the University of Phoenix in Northern Virginia, graduation rates are 6 percent. At Strayer University, another for-profit predatory college in District of Columbia, the graduation rate is 15 percent.(28) Once again, parroting the subprime mortgage fraud and consequent four million foreclosures, such results could only be considered successful in the growing "subprime" model of education that is now the darling of Wall Street and is busy foreclosing on students' lives.

While Kaplan and other for-profit schools claim to serve a disadvantaged largely minority population, does anyone really believe that saddling low-income students with $40,000 or more in loan debt is really helping them? Some seem to, like the Rev. Jesse Jackson.(29) He is either delusional or getting paid by the for-profit industry. Much closer to the truth, for-profit colleges are literally taking advantage of low-income minority individuals, financially mugging them in broad daylight, right under the noses of the political elites who enshrine and legalize the whole sordid enterprise in a ruthless and callous effort to obtain their Pell Grants and government-guaranteed loans, which are the lucrative sources of revenue and grotesque profits for the executives and shareholders.

Along with subprime mortgages, payday loans, check cashing joints, car title company loans, furniture rental chains and other financial parasites, for-profit predatory colleges have taken their place as predators on the poor - inflicting misery and hardship on the homeless, single mothers and returning war veterans; all this as Wall Street seeks new sources of profit through the financialization of education.

While executives are swaddled in luxury items and cash and awash in fantastic compensation packages, the low-income, working-class students they mendaciously claim to serve are saddled with tens of thousands of dollars of arguably usurious nondischargeable debt. Current interest rates to students for the direct Stafford loans are broken down for direct Subsidized loans and direct unsubsidized loans. For undergraduate students, if the first disbursement of the direct subsidized loan is between July 1, 2011, and June 30, 2012, the interest rate on the loan is fixed at 3.4 percent. Graduate students are not so lucky. Their interest rate or cost for the loan is a whopping 6.8 percent. This is also true for the cost of borrowing for a direct unsubsidized loan.(graduate or undergraduate) Even though these amounts are fixed, the cost is exorbitant. The cost to borrow funds for a 30-year mortgage on December 27, 2011, was as low as 2.8 percent.(30) Many students are paying interest of over 7 percent on student loans they previously took out. This is debt peonage and a significant number of gray-haired working people in their 40s are still paying off student loans.

The majority of students never graduate from for-profit universities and colleges. Instead, they are left with no education, no jobs and few prospects - for when a student defaults on their student loans, they face wage garnishment, and if they still owe when they reach the age of Social Security eligibility (whatever age this will be in the future), even their Social Security checks are garnished for years or in perpetuity. Student borrowers who default can also face a lifetime of consequences, including an inability to borrow for a car or a house, wage garnishment, seizure of tax refunds, or even, in an era when employers increasingly check credit reports, difficulty getting a job or renting an apartment. Inevitably, they are left with broken dreams, devastated credit and forced to experience a form of "financial or social death" as they become financially and socially disposable.

Facilitated by the Government

Under new regulations which take effect in 2014, the DOE will now allow colleges to have a loan default rate of up to 40 percent in any one given year, with an allowable default rate of 30 percent over three years.(31) This is an increase over the 35 percent prior to the new regulations. The government's new allowance of a 30-40 percent default rate represents the theft of taxpayer money by Wall Street, with the costs borne by students and taxpayers. The new DOE regulations that increase the allowable default rate simply give the green light to for-profit colleges to keep shackling large numbers of low-income students with nondischargeable debt. This is an example of just how neoliberal government policies work to assure increasing institutional privatization through regulation and deregulation - in this case for-profit predatory colleges - while ensuring the enrichment of elite financial players on Wall Street like hedge fund operators, stock brokers, investment counselors, and the like. It is a government for the corporations, of the corporations and by the corporations.

Anthony Miller, now deputy secretary of the DOE, is a perfect example of how neoliberal governmental policies encourage the revolving door between Wall Street lobbyists who pay bribes to politicians and the government to assure a seamless relationship between big corporate government and Wall Street financial interests. Mr. Miller.(32) will be one of the featured speakers at the Capital Round Table's $1,400-a-plate conference entitled: "Private Equity Investing In For-Profit Education Companies" scheduled for January 12, 2012. Prior to his appointment to the DOE, Miller was an operating partner with the private equity investment firm Silver Lake Partners.(33) You can go to the site and take a look at the other participating sponsors of the event - they are all representatives of Wall Street and the financial sector.

The roster of those who have supported and defended for-profit colleges - ignoring high student debt, low graduation rates and high levels of loan defaults - includes Speaker of the House John Boehner, North Carolina Rep. Virginia Foxx, Nancy Pelosi, Diane Feinstein, Jesse Jackson and presidential candidates Michele Bachman and Ron Paul, to name a few.(34) Pelosi is one of the more despicable of the for-profit predatory educational industry defenders and there is no mystery. Some of the biggest recipients of the $32 billion in federal student loans and Pell Grants each year paid to for-profits are in her district - including major Democratic donor John Sperling, founder of the online University of Phoenix, the nation's largest for-profit predatory college, where the extraction of government funds for private profit is one of the most larcenous. Like any paid-for political trollop, Pelosi expresses her concern for low-income minority students' educational opportunities while shoveling for-profit educational industry money into her war chest. The fact is that, without the Democrats, the Republicans probably could never have given the for-profit industry the legitimacy and favorable laws the industry wanted. Many Democrats are vigorous defenders of the for-profit college scam for they know that Wall Street is where the money is. Richard Blum, Diane Feinstein's husband, sits on the board of the University of Phoenix. So does Senator Burton of California.

The New York Times reported that the Washington Post Company spent $1.6 million lobbying Congress with respect to the proposed gainful employment regulations affecting for-profit colleges.(35) The Democrats are the worst abusers. Take Anita Dunn, a close friend of President Obama and his former White House communications director, who worked with Kaplan University, one of the embattled school networks. Jamie Rubin, a major fund-raising bundler for the president's re-election campaign, met with administration officials about ATI, a college network based in Dallas, in which Mr. Rubin's private-equity firm has a stake.

A who's who of Democratic lobbyists - including Lanny Davis, Richard A. Gephardt, the former House majority leader; John Breaux, the former Louisiana senator; and Tony Podesta, whose brother, John, ran Mr. Obama's transition team - were hired to buttonhole officials.(36) All the usual suspects and beltway insiders worked assiduously, for money of course, to assure years more of student exploitation and oppression under the corporate thieves.

While news sources reported that Washington Post CEO Graham met privately with various members of Congress in an effort to stave off or at the very least water down DOE regulations of the for-profit predatory college industry, he has refused to disclose with whom he met.(37) Rather than fostering full disclosure, transparency or reporting on corporate interests which corrupt the political process - the job of the media - The Washington Post and its chief CEO have actually engaged in corrupt political influence with the public scarcely aware.

The Pitchmen

CEOs of for-profit colleges and universities repackage what is essentially a financial predatory business plan that negatively impacts citizens and the government and then perfidiously turns around and sells their educational products to disenfranchised students as a "social benefit." Graham has been the most public of the CEO pitchmen, promoting himself as a "champion of poor students," while his actual actions tell a contrary story.

On January 14, 2011, Donald Graham published an editorial in The Wall Street Journal entitled: "Avoiding Disaster for low-income students."(38) Just two months later, WaPo threatened to raise tuition rates on the low-income students - the same students that Graham had claimed to advocate for in his Wall Street editorial - if Congress did not modify a DOE rule (the gainful employment rule), which Kaplan was at risk of violating.(39)

Graham's motivation for getting into the lucrative for-profit education business has nothing to do with altruism and everything to do with greed and profit extraction from the federal government and taxpayer largesse. A November 7, 2003, Wall Street Journal article, entitled: "Kaplan Transforms Into Big Operator Of Trade Schools" The Wall Street Journal reported:

"He [Graham] says one reason Washington Post has focused on educational acquisitions is that television stations and other media properties it might otherwise seek to acquire have grown too expensive. "Given prices in media, education has been the bulk of where we have had to grow and I love the way Kaplan grows,' he says."[40]

The 2010 Washington Post 10-K annual report filed with the Security and Exchange Commission (SEC), disclosed that "Compliance With Recently Adopted Regulations Regarding Incentive Compensation May Make It Difficult for Kaplan to Attract Students and Retain Qualified Personnel."(41) The Washington Post's SEC disclosure tends to undermine the claims by the CEO pitchmen, like Graham, that their online for-profit colleges meet real social and human needs.

The Kaplan CHI surgical tech case revealed Graham's lack of regard, even contempt, for the disadvantaged students Kaplan claims to serve.(42) In 2007, a whistleblower lawsuit (false claims suit) was filed with the DOE by David Goodstein, claiming students at CHI Institute in Broomall, Pennsylvania, school were being enrolled in the surgical technician program offered at the school even though Kaplan knew there was a lack of necessary clinical externship sites for the students to complete the program. After completing the classroom portion of the program, some students were either dropped from the program or sent home on leave, never to be called back.(43)

Earnest, hard-working students were duped by Kaplan and had their dreams of a career stolen, and they were left with defaulted loans and debt of up to $14,000 a piece. WaPo settled the matter with the Department of Justice in 2011 for $1.6 million.(44) This included $500,000 to pay off the loans of 43 students who were in the program. Much like the subprime loan scandal, despite evidence of misconduct by Kaplan, no criminal charges were ever brought against the company or its officers.(45)

Graham waited for over four years to finally pay off the outstanding loans of Kaplan students victimized in the CHI matter. At the same time Graham was delaying paying off the CHI students' loans and dragging his feet in an attempt to avoid responsibility and eventual settlement for wrongful acts, he and his family were busy cashing in over $70 million in stock, and the Post Company was paying out $76 million to ex-Kaplan CEO Jonathan Grayer. Of course, Graham has made and will make no apologies to the students, nor did he make any effort to refund money to students to compensate them for their lost time, pain and suffering and untold stress and anxiety.

"I attend Kaplan University as well. My major is medical assisting. The school is having a hard time finding me a clinical site. Therefore, I will have to take next semester off until I am placed at a site."[46]

Sadly, it appears the CHI fraud is not an isolated incident. With the DOE caving into the paid lobbying efforts of the silk-back thugs who represent the industry and the outright strong-arming of politicians and the DOE by the multibillion dollar for-profit educational industry and their public relations firms, it is doubtful that we can expect any action or remedies from the Department of Justice, the DOE, or any other institutions purportedly designed to work to hold Wall Street perpetrators accountable. This is how neoliberalism and late-stage capitalism now function. As to the smarmy politicians who say they represent the interests of citizens, they don't. In fact, they can be found in the corridors of power with their hands out and palms up, eager to do the bidding of what is undoubtedly one of the most rapacious and atrocious for-profit industries in the United States.(46) In this way, they are co-conspirators in what will be one of the biggest financial bubbles to soon burst as students find they have no futures other than debt and - for the minority who do graduate - virtually worthless for-profit degrees.

(11) United States Securities And Exchange Commission, Washington, DC, 20549, WaPo form 10-Q, Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, for the quarterly period ended October 2, 2011, or, Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, Commission File Number 1-6714. pp. 21).

(21) United States Securities And Exchange Commission, Washington, DC. 20549, WaPo, form 10-K. annual report pursuant to section 13 or 15(d) of the Securities Exchange Act of 1934. for the fiscal year ended january 2, 2011. Commission file number 1-6714, pp. 47.

(30) The current interest rates for the irect Stafford loans are broken down for direct Subsidized loans and direct unsubsidized loans. For undergraduate students, if the first disbursement of the direct subsidized loan is between July 1, 2011, and June 30, 2012, the interest rate on the loan is fixed at 3.4 percent. Graduate students are not so lucky. Their interest rate or cost for the loan is a whopping 6.8 percent. This is also true for the cost of borrowing for a direct unsubsidized loan (graduate or undergraduate). Even though these amounts are fixed, the cost is exorbitant. The cost to borrow funds for a 30-year mortgage on December 27, 2011, was as low as 3.94 percent.

(31) Gast, S., Glickman, J. (September 12, 2011) "Default Rates Rise for Federal Student Loans Department continues work to protect taxpayer funds and help students manage their debt," the US DOE. The New York Times.

(38) Graham, D., (January 14, 2011) "Avoiding Disaster for Low-Income Students For-profits cost the taxpayers considerably less per student than any other form of higher-education."

(39) United States Securities And Exchange Commission, Washington, DC, 20549, WaPo. form 10-K. annual report pursuant to section 13 or 15(d) of The Securities Exchange Act of 1934, for the fiscal year ended January 2, 2011, Commission file number 1-6714.

Weil, D., (December 16, 2011) "U. of Phoenix founding family sells $127 million in stock while less than 7 percent of Phoenix students graduate in DC metro area," The Daily Censored.

*Kaplan's Donald Graham and his family are not alone in dumping industry stock. Another stunning example quite recently in 2011 when the Sperling family (founders of University of Phoenix and huge campaign contributors to Nancy Pelosi) cashed in $127 million in stock while the University of Phoenix was ranked as having the lowest graduation rate (6-7 percent) of any college in the Washington, DC, metro area.

Danny Weil is a writer for Project Censored and Daily Censored. He received the Project Censored "Most Censored" News Stories of 2009-10 award for his article: "Neoliberalism, Charter Schools and the Chicago Model / Obama and Duncan's Education Policy: Like Bush's, Only Worse," published by Counterpunch, August 24, 2009. Dr. Weil has published more than seven books on education in the past 20 years. You can also read much more about the for-profit, predatory colleges in his writings found at Counterpunch.com, Dailycensored.com, dissidentvoice.com and Project Censored.com where he has covered the issue of the privatization of education for years. He can be reached at [email protected] His new book, an encyclopedia on charter schools, entitled: "Charter School Movement: History, Politics, Policies, Economics and Effectiveness," 641 pages, was published in August of 2009 by Grey House Publishing, New York, and provides a scathing look at the privatization of education through charter schools.